RPT-AUTOSHOW-UPDATE 1-GM says could seek further US loans

Reuters Staff

4 Min Read

(Adds comments from Wagoner, background on industry)

By Kevin Krolicki

DETROIT, Jan 11 (Reuters) - General Motors Corp (GM.N) Chief Executive Rick Wagoner said the struggling automaker had enough funding to last through March but could still seek additional U.S. government loans beyond the $13.4 billion it has already been pledged.

Wagoner, speaking to reporters at the Detroit auto show, also said GM was still seeking a potential buyer for its Saab brand. "We're still looking," he said.

GM had warned that it was at risk of running out of cash before the Bush Administration cleared its request for emergency funding just before the end of the year.

In recent weeks, some reports have said GM executives believed the $13.4-billion in U.S. government loans would allow the automaker to survive even under its most dire forecasts for the U.S. market in 2009.

But Wagoner indicated GM could still opt to seek additional funding after a March review with U.S. officials intended to assess its progress in restructuring.

"The $13.4 billion is consistent with what we asked for through the first quarter under our downside market scenario, which is the way the market is running," Wagoner said.

"We will obviously review the whole plan and at that point we'll see what requirements are. But for now we think we're well covered through the period we asked to be provided," he said.

Under the terms of GM's loan, the automaker faces a March deadline to demonstrate to U.S. officials that it can be viable based on winning steep concessions from bond holders and the United Auto Workers union.

GM has set a goal of reducing its debt by almost $36 billion by asking bond holders to swap out of existing debt for shares and by negotiating new terms for its promised $21 billion contribution to a trust fund for retiree health care that will be run by the UAW.

The loan program as structured by the Bush administration requires GM to seek to cut its debt by two-thirds and to negotiate sweeping changes to its UAW contract. UAW in 2007 made landmark givebacks to the industry, including GM.

This would include making its work rules and wages competitive with non-union U.S. plants run by Japan's major automakers, led by Toyota Motor Corp. (7203.T).

But the UAW has objected to those terms as unfair, and a bill backed by Democratic leaders in the House of Representatives would strip the requirement for steep UAW givebacks from the auto bailout program.

GM is set to begin talks with representatives of the UAW this week in Detroit.